–– David de Bruyn

Audio version of this article is available here: YouTube, Apple Podcasts, or Spotify.

Because of Africa’s history of slavery and racial discrimination, African governments often believe it is their duty to protect labourers from exploitation. They believe one of the ways to do this is to enact and enforce minimum wage laws, forcing businesses and employers to pay labourers no less than a stipulated amount. 

On the surface, this seems fair. After all, shouldn’t governments stop greedy businesses from exploiting desperate people? 

The Bible itself has several principles regarding wages. 

1) Wages should be agreed upon and fixed: Gen 31:7 – Laban was considered unjust because he changed Jacob’s wages ten times 

2) Employers are not to withhold wages from day-labourers dependent on them, but should pay timeously. (Lev 19:13, James 5:4)

3) Labourers deserve remuneration fitting for the value of their labour. (Luk 10:7, 1 Tim 5:18)

4) Jesus commanded soldiers (and by implication, all others) to be content with their wages (Luke 3:14)

So, shouldn’t Christians support a minimum wage?

The best way to understand fairness in wages is to understand how wages work in a free-market economy. In a free market of supply and demand, a seller wants to sell his goods for as high a price as anyone is willing to pay. A buyer wants to buy goods for as low a price as is possible for him to pay. Wages are similar. A worker is a supplier, and wants to sell his work for the highest possible price, to the highest bidder. An employer, in this case, is a buyer, who wants to buy the ‘goods’ of a labourer’s work for as low a price as is possible for him to pay. 

What a willing buyer and willing seller are willing to settle on varies greatly, depending on the place and local economy. At least five factors which will affect labour prices:

1. The amount of people able and willing to do the work. The more labourers competing for a particular job, the lower the wages, as labourers will rather take lower wages than no wages. The fewer labourers that are able or willing to do the work, the more the labourers become prized, and the higher their wages.
2. The number of employers seeking labourers. The more employers that compete to attract labourers, the higher the wages, as employers seek to attract labourers with better incentives. The less that employers compete with one another, the more the employers become prized and the lower the wages. 
3. The importance of the work in that economy. Snow-ploughers are very useful in Minnesota, but useless in Johannesburg. Navy captains will be highly prized by nations like Russia, but not by Zimbabwe. Technology lowers the value of some labour, or replaces it altogether, while raising the value of other labour, in addition to creating new labour. The work of making printed roadmaps is losing value, while cyber-security is gaining value.
4. The productivity of certain businesses. Some businesses are more efficient because of the tools they use: their technology, management, and skill. This means they have more money to use as an incentive to keep their labourers. 
5. Richer societies have higher living costs. This tends to lift the minimum amount that workers are willing to work for. Poorer societies have learned to subsist around much less, and therefore workers can live on less. 

A minimum wage is an artificial price control. By forcing employers to pay a fixed minimum, several negative effects occur. First, if the value of the labour is less than the minimum wage, employers employ fewer people and make those employees do more work. (Or they close down altogether.) There are now fewer jobs, and those who have jobs have worse working conditions. Second, an ‘informal’ employment economy develops, where labourers who are competing for labour vastly underbid the minimum wage. These labourers are probably working for less than they can afford, but some wage is better than no wage. 

For example, Tiger Wheel & Tyre originally made aluminium wheels exclusively in South Africa for two decades. But when minimum wage laws came in, they could now only run at a loss or break even. When Tiger expanded, they invested in Poland rather than in SA. South Africa lost the opportunity to create more jobs. 

According to one metric, South African workers are twice as productive as Indonesian workers, minimum wage laws stipulate that they be paid five times as much. A business will make more money with the less productive Indonesians because they are five times cheaper. South African labourers are twice as valuable as Indonesian workers, but they have been priced out of the market by politicians. 

But won’t companies ‘exploit’ labourers in a free market? Sinful human hearts will exploit wherever they can. A minimum wage law is not the answer to ensure better wages. The market will always end up paying labour what it thinks it is worth. To raise wages, a nation should do three things:

1. Increase the amount of businesses competing for workers, by making it easier and safer to do business there.
2. By increasing the amount of businesses, increase the general wealth of the country, and the cost of living for all. 
3. Provide goods and services that are highly prized, not only within the nation, but globally. Be a competitive nation within the global market.

If you are a Christian and an employer, pay your employees what is fair in the market. Pay what is agreed, and on time. If you are a Christian and an employee, accept your wages with contentment (since you voluntarily agreed to work there). If you believe what you are supplying to your company is worth more than they are paying you, it is acceptable to respectfully discuss this with your employer. If your employer does not agree, you may try to see if a competitor of your employer is willing to value your services at your expectation.